Economics Amplified

The United States is facing a range of challenging policy issues, from trade to inequality to climate change. The good news is that academic economists are doing cutting-edge work to help solve the challenges of the day, at the University of Chicago and institutions around the world. Over the past 20 years, there has been increasing momentum toward evidence-informed policymaking. While this seems promising, barriers still exist to bridging the divide between academia and government. On November 19, the Becker Friedman Institute for Economics (BFI) welcomed MIT Professor of Economics Abhijit Banerjee, recipient of the 2019 Nobel Prize in Economics and co-author of the forthcoming book, Good Economics for Hard Times. Banerjee joined a panel of experts, including UChicago's Katherine Baicker, Michael Greenstone and Steve Levitt, along with the Obama Foundation's Adewale “Wally” Adeyemo, to share their experiences and perspectives on the potential for economics to improve policy outcomes, the obstacles that exist to evidence-informed policymaking, and opportunities for improvement. Follow along with Banerjee's opening remarks and view his presentation: https://bfi.uchicago.edu/wp-content/uploads/CanEconomicsSavetheWorld_Presentation.pdf For more on the event, visit: https://bfi.uchicago.edu/event/can-economics-save-the-world/

The Becker Friedman Institute for Economics (BFI), the Chicago Economics Society (CES), and the Booth Alumni Club of Washington, DC, welcomed Chang-Tai Hsieh, Phyllis and Irwin Winkelried Professor Of Economics, Chicago Booth School of Business, for cocktails and a conversation on Crony Capitalism with Chinese Characteristics. David Rank, former Deputy Chief of Mission and Charge' d'Affaires at the U.S. Embassy in China, moderated a discussion following Professor Hsieh's remarks. Professor Hsieh discussed how China's fast-paced growth over the past three decades is one of the most remarkable events in world economic history. This growth was fueled by the introduction of pro-market policies, especially in agriculture and trade. However, China's national institutions continue to restrict property rights and hinder private business development, among other obstructive policies. To counter those forces, China has developed a system of crony capitalism at the local level that has allowed businesses to thrive. Political leaders benefit when local businesses succeed, so those leaders use their power to enhance certain businesses' success. Local political leaders then compete with other cities for businesses, creating a competitive market that helps drive economic growth.

When faced with debt across multiple credit cards, do people pay down their balances in a way that makes financial sense? On February 1, BFI hosted Chicago Booth Professor Neale Mahoney for a Friedman Forum luncheon lecture on his recent working paper, “How Do Individuals Repay Their Debt? The Balance-Matching Heuristic.” In the paper, Professor Mahoney and his colleagues examine how credit card holders in the United Kingdom divide their payments between credit card balances. Instead of paying down the card with the highest interest rate first, the authors find people make payments based on the size of the balances on each credit card. These findings reveal the large gap between the optimal way to repay debt, and reality of how people repay their credit card debt.

Traditional economics assumes rational actors. In daily decision-making, however, we all make decisions influenced by our biases and beliefs, whether which car to buy or who to vote for at the polls. As a result, outcomes often deviate from the standards of rationality assumed by economics. Combining discoveries in human psychology with a practical understanding of economics – including incentives and market behavior – Booth Professor Richard Thaler, recipient of the 2017 Nobel Prize in Economics, and Harvard Law School Professor Cass Sunstein, recipient of the 2018 Holberg Prize and former Administrator of the White House Office of Information & Regulatory Affairs, have revolutionized our understanding of how human behaviors can impact markets. Their work highlights opportunities to drive decision-making in a direction that improves outcomes for businesses, government, and society as a whole. The Becker Friedman Institute for Economics welcomed Thaler and Sunstein, authors of the best-selling book "Nudge: Improving Decisions About Health, Wealth, and Happiness," for a discussion about the power of behavioral economics to affect decision-making. BFI Director Michael Greenstone, the Milton Friedman Professor of Economics, the Harris School and the College, moderated the discussion.

Chicago Booth Professor Steve Levitt, co-author of Freakonomics, discussed modern data science techniques at BFI's latest Becker Brown Bag talk.

In this episode, Murphy talks with Nancy Stokey, The Frederick Henry Prince Distinguished Service Professor of Economics, about the transformative effects that technology has on economies.

Richard Evans is a Senior Fellow in Computational Social Science at the University of Chicago, and Fellow here at the institute. Evans sees immense potential in the methods, practices, and even workflows that computer engineers have implemented in their own discipline, and is working to bring those skills into Chicago economics through his role both here at the institute and via the Masters in Computational Social Science, a graduate program he's a part of. Evans spoke to us about how we can expect to see computation shape different aspects of economic study, as well as the ways that computer scientists and software engineers can teach economists how to work smarter. Music in this episode:— Auscultation: https://auscultation.bandcamp.com/album/spiritland Boris Mann 2: https://soundcloud.com/boriscloud/acid-jazz-sunday

Edward P. Lazear is a labor economist and a founder of the field known as personnel economics. His research centers on employee incentives, promotions, compensation and productivity in firms. In this episode, Lazear and Kevin Murphy talk about the legacy of human capital and labor economics at the University of Chicago, as well Lazear's experience crossing from academia to the Council of Economic Advisers and back again.

Amanda Agan is interested in the ways that laws and regulations play out in the real world, often yielding unintended consequences. She visited the institute this spring and spoke about her recent work to evaluate policies that eliminate questions about previous criminal convictions from job applications Advocates of these “Ban the Box” policies have argued that these laws could increase employment for minorities, but some economic theories imply that they could have negative consequences for minorities without records. Agan and her coauthors designed a field experiment to see if the policy performs as intended.

In this episode, Kevin Murphy talks with Casey Mulligan, professor in economics at the University of Chicago. Mulligan examines microeconomic trends, including labor, through a macroeconomic lens, with a particular interest in how policy can inadvertently shape the labor market in unexpected ways.

Manasi Deshpande is an emerging expert in how social insurance programs shape the outcomes of their recipients. In this episode, she and Kevin Murphy discuss the importance of empirical measurement of such programs over a lifetime and how those effects shape the recipients' labor response. The pair talk about the ways that economists bring a unique framework to public policy in order to better measure the efficacy of what a policy is trying to do.

In this episode, Murphy gets concrete with Chad Syverson, the J. Baum Harris Professor of Economics at Chicago Booth, about how his engineering background influences his approach to economics, understanding the drivers of productivity, how it is measured, and what can be gleaned from past growth trends in predicting what may come.

In this episode, Murphy and Muhammad Akbarpour, a Becker Friedman Institute Research Fellow, examine the opportunities that surround the development of an international kidney exchange market, the obstacles that inhibit that market from being implemented, and the experience of being an early career scholar at the University of Chicago.

In this episode, Murphy and James Heckman, Henry Schultz Distinguished Service Professor of Economics at the University of Chicago, delve into the topic of human capital, focusing on how both education and early home life play a defining role in the development of a child, and talk about how the economics toolkit is influencing the work of social scientists outside the discipline.

In this episode, Murphy and José Scheinkman, a former UChicago faculty member and department chair now at Columbia University and Princeton University, elaborate on the experience of being an economist at the University of Chicago, evaluate recent trends in the global economy, and highlight ways in which economic thinking can more broadly be applied to a wide range of problems and solutions.

In this episode, Murphy talks with Erik Hurst, V. Duane Rath Professor of Economics and the John E. Jeuck Faculty Fellow at Chicago Booth, to explore Hurst's perspective on the possible common ground between macro- and micro- economic perspectives and to evaluate labor market trends from the early 2000s leading up to today on the employee side of the manufacturing and housing industries.

In this episode, Murphy talks with Steven Davis, William H. Abbott Professor of International Business and Economics at Chicago Booth, explore labor market trends from the employer side and talk about how uncertainty over impending government policy and regulatory shifts can influence labor market trends and job creation.

In this episode, Murphy talks with Benjamin Brooks, a Becker Friedman Institute Research Fellow, about what drew Brooks to economics as his field of research, the nuances of understanding game theory, and the role of the Becker Friedman Institute in enriching the study of economics at the University of Chicago.

In this episode, we speak with Manasi Deshpande, who currently works at the Institute as a postdoctoral research fellow leading up to joining the UChicago Economics Department as an assistant professor in the fall of 2016. Deshpande's research interests include the effects of social insurance and public assistance programs on consumption, health, and well being, and the interaction between these programs and labor markets. By taking advantage of newly available data from the Social Security Administration, she's able to gather quantitative insights into the impact that social insurance programs have on long-term outcomes of their recipients, important when weighing their overall benefits and costs.

In today's episode we talk with Ben Brooks, a research fellow at the Becker Friedman Institute interested in how incomplete information complicates classical game theory. This summer, Brooks organized a conference, bringing together experts in mathematical modeling, incomplete information and game theory. Researchers highlighted important developments in modeling information in auctions and continuous games, as well as the relationship between information and behavior in the era of the internet and big data.

In this episode, we speak with David Weisbach and Jennifer Nou of the University of Chicago Law School, as well as Alan Sanstad of the Computation Institute and The University of Chicago Harris School of Public Policy. The trio of researchers organized a conference in April 2015 centered on a persistent issues for federal institutions: when making regulations and rules, how should policymakers account for what they don't know: the uncertainties that could affect the long term costs and benefits of their actions? Weisbach, Nou and Sanstad sat down with us to talk about why getting policymakers and economic theorists together might hold the key to helping federal agencies best assess these uncertainties and understand how to address them in the policy process.

John Taylor and Harald Uhlig recount a recent series of conference aimed at codifying the most important principles guiding modern macroeconomic analysis. Music is by Boris Mann 2, whom you can listen to on Soundcloud. Licensed under Creative Commons.